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SBM4203 ERP Software and Its Benefits for TUMI Organization Assessment 3 Answer

Unit Code and Title: SBM4203 Management Information Systems Assessment 3: Proposal

Due date:Week 10
Group/individual:Individual
Word count / Time provided:1500 words
Weighting:30%
Unit Learning Outcomes:ULO-1, ULO-2, ULO-3, ULO-4, ULO-5
Course Learning Outcomes:CLO-1, CLO-4, CLO-6, CLO-8, CLO-9
Graduate Attributes:GA09, GA11, GA12

Marking Information: The Proposal will be marked out of 100 and will be weighted 30% of the total unit mark.

Assessment Details:

Read the case study below and complete the exercise at the end.

Case study: How Tumi Cut Inventory and Increased Sales

A decade ago, Tumi, Inc.’s customer fill rates were below 80%, and the company had an excess of inventory - among other problems. But when the travel products maker decided to retire its legacy systems and standardize on SAP Business Suite, it experienced business expansion and better customer service. This profile details Tumi’s implementation success story and its transition to a more retail-focused company

At a Glance

Tumi, Inc.

Headquarters: South Plainfield, New Jersey

Industry: Maker of luxury luggage, handbags, and other travel accessories

Company details:

Founded in 1975

First retail store opened in 1997

140 retail, department, and specialty stores in 65+ countries 100+ patents for product design and component parts

SAP solutions: SAP ERP

SAP CRM

SAP NetWeaver BW

The agenda of any executive meeting usually addresses the same topic, whether directly or indirectly: how to expand the company’s customer base and keep existing customers satisfied and coming back. At luggage and travel products maker Tumi, Inc., when management meetings concentrated on the company’s bulging inventories and poor customer fill rates, everyone looked to the IT organization for answers. And when the discussion turned to accelerating the company’s European expansion, again the group looked to IT for a solution.

At that time, in 2001, IT didn’t have an easy answer. Tumi’s patchwork of homegrown, US- centric legacy systems provided little capability for improved inventory management, customer satisfaction, and global expansion. Disparate systems for important processes such as order-taking, warehousing, and financials weren’t connected and relied on periodic batch updates to provide a somewhat consolidated but infrequent view of operations.

In short, the company’s growth was being stifled at a critical time, and the IT organization did not have the appropriate technology in place to handle the business’s demands for a new direction.

“We knew our customer fill rates were below 80%, and we had a ton of capital sitting in inventory,” says Jim Walsh, Vice President of IT. “We heard this once a month at our management meetings, and we would tell the group we were working on solutions — but, in reality, those were just Band-Aids.”

Today, almost a decade later, those management meetings at Tumi operate very differently, and senior business leaders’ view of IT has shifted dramatically. According to Walsh, “The IT organization is much more of a business driver today than it was in the past.” Now, business process owners seek out the IT organization’s advice and support in designing and executing their business strategies.

“When we have steering committee meetings and discuss the three-year plan, no one asks if there will be an IT issue,” says Walsh, adding that there really aren’t “IT problems” anymore but rather “business problems,” which are collaboratively solved with IT being one of the organizations contributing to the solution.

TUMI Travel Bag pack

What’s behind this shift isn’t simply an increase in the size of the IT organization. (Walsh’s core team remains steady at 12 people.) The difference has been Tumi’s decision to retire its legacy systems and standardize on a single integrated enterprise system, which started with a “big-bang” implementation of SAP Business Suite solutions to produce a large amount of change in a short amount of time.

Matching Technology to Business Needs

The first step in Tumi’s IT-driven business transformation was perhaps the most important — selecting the right enterprise system. After managing with its legacy systems for so long, one of Tumi’s top priorities in evaluating an enterprise system was scalability. The company wanted to be sure that no matter where its business initiatives took it, growth would not be constrained by IT systems. It also wanted the flexibility to deploy solutions that would directly affect its most pressing — and often changing — business challenges.

To address these needs, Tumi deployed SAP Business Suite, specifically for the following functionality:

  • SAP Customer Relationship Management (SAP CRM) to improve relationships with

both wholesale and retail customers

  • SAP Sales for Retail and Wholesale Distribution to alleviate poor customer fill rates
  • SAP Extended Warehouse Management (SAP EWM) to streamline inventory turns
  • SAP NetWeaver Business Warehouse (SAP NetWeaver BW) to centralize data and improve reporting
  • SAP Forecasting and Replenishment for Retail and Wholesale Distribution to determine customer trends earlier and react better to consumer market demands
  • SAP ERP Financials to accurately track financial data and streamline quarterly closing processes

But technology alone would not solve all of Tumi’s challenges. Through its close partnership with SAP implementation specialist Answer think, Tumi identified SAP installation best practices and then redesigned some of its business processes to better leverage the new systems. “We agreed ahead of time that we would make nothing custom to Tumi,” says Walsh. “We wanted to implement proven solutions that other companies have used already very successfully.”

How Technology Drives Business Expansion

With a foundation of new, scalable solutions in place, business expansion at Tumi is happening more rapidly than previously expected. Since its SAP implementation go-live, Tumi has opened two new US distribution centres, increased distribution to overseas markets, and become a much more retail-focused company. “We were predominantly a wholesaler when we implemented our SAP solutions, but we’re now becoming a retailer as well,” Walsh says. “It was the natural migration of our business, but it would have been impossible with our legacy systems. Now we’re distributing to our own stores and have offices and sales teams in many more countries.”

High-Impact Results

Tumi has seen some dramatic business results since implementing SAP Business Suite solutions, most notably:

30% reduction in inventory levels

38% reduction in warehouse space

44% reduction in days sales outstanding 25% increase in sales

The new IT strategy and SAP implementation not only drove the operational aspects of the retail expansion — the improved inventory management processes actually helped free up working capital to allow Tumi to pursue its retail channel. Walsh says, “We brought our inventory levels down by 30% while increasing sales by 25%.”

As Walsh explains it, in the past, Tumi forecasted using spreadsheets. And because the manual process took so long, it was done infrequently, providing longer-term forecasts at best, which required higher inventory levels. However, the visibility provided by the SAP Business Suite solutions allows Tumi now to develop more accurate and timely forecasts and then base its manufacturing and supply chain decisions on real demand instead of longer- term forecasts.

“When actual demand starts coming in, we can see how close we are to the forecast and plan our inventory based on that,” Walsh says. “We are talking with our manufacturing suppliers about inventory, telling them to push out certain purchase orders and bring others in, which we weren’t doing before because we had nothing to base our recommendations on. This is where we get our efficiencies — in exchanging information, in being able to alert everyone in our supply chain of potential delays, issues, and shortages, and in being able to react quickly.” The “actual demand” data comes from Tumi’s retailers being connected to its SAP CRM application, which provides instant data on product pricing and availability throughout its various sales channels. And on a broader scale, Tumi is using SAP CRM to analyze consumer buying trends to better respond to consumers’ changing needs and put products where they are needed most.

The result is a dramatic 30% reduction in the inventory it carries and a corresponding 38% reduction in warehouse space, which equates to a significant increase in the working capital available for new projects, such as launching a retail sales channel.

Providing Customers with Better Service

Today, Tumi operates roughly 90 retail stores worldwide, with many additional partner-run locations in operation. Going forward, Tumi plans to continue its transition from wholesaler to direct-to-consumer retailer, both online and in its stores. But retail requires a more hands- on customer service model than wholesale, which is another area where Tumi’s SAP CRM application is driving the business forward.

“When a retail customer calls to find out where an order is, we used to have to put the customer on hold while we called the warehouse. Our customers expect more than that,” Walsh says. “Now with SAP CRM, we can provide better service to those consumers. If they sent a bag in for repair, we can tell them exactly where it is, no matter who picked up the phone. It’s all in the same system now.”

These various customer-facing enhancements, such as improved inventory levels, fill rates, and customer service — made possible by Tumi’s new SAP solutions — are setting the stage for happier, more satisfied consumers, which leads to repeat business and more sales opportunities.

Exercise: 

Imagine you are a manager of a company which is also running a business like TUMI with similar capital and infrastructure. It has many departments such as sale, marketing, finance, HRM etc. By reading the above article, you are motivated to upgrade your system to ERP. You are required to make a business proposal to convince your CEO about installing ERP system in your company. You must address the followings in your proposal through considerable amount of literature review. 

1. What is Enterprise Resource Planning (ERP)? Its benefits and limitations. 2. Why do you believe your company should be upgraded with ERP? 3. List the top 10 brands which offer ERP solution to SMEs. 4. Do a comparative analysis among of them. 5. Which brand do you think is feasible to your company, other than SAP, and why? Justify your arguments with a detailed cost benefit analysis.

Answer

Introduction 

In the past few decades, most of the companies were preferring SAP software for their company growth and development. But as we can see, this software is not meant for every company. It has many pros and cons which has already impacted our performance in a negative way. Our company is not able to make good decisions as majorly faults are occurring from the application. One of the deadliest cybercrime which is PHISHING is spreading their roots in the market with the high rate. As this type of cybercrime is able to main propaganda is to steal all the confidential data from the company with a single email or a spam message on user personal devices. They will ask is your simple details from where the will get all the information about the user.

This case study is about the organization name TUMI, which are making the travel bags for their customer. The company was facing a major crisis in their IT department. The IT department was not able to organize the data and their inventory as per the desired requirement of the company. Due to their customers were suffering. The major change which the IT department has made in their system is that they have changed their software with SAP. The SAP software helped the TUMI in solving their main concern of inventory management.  

Scope of Statement

The scope of this report is to understand the adaption of the new software in the company. As with the old software our company is not able to achieve their desired goals and profits just like the case of TUMI. But as they changed their software, their performance has also increased. With the same scenario, we will understand the ERP software and their benefits in our company.

Enterprise Resource Planning

ERP stands for enterprise resource planning, and it is the latest form of technology which is taking over many companies. This ERP software is helping in the management of data and the inventory of the company is a very efficient way with the help of advanced technology based application and software. As per author Asgar & King,( 2016) this software helps the user in providing the accurate piece of information at every point of time. It connects every department of the company which is finance, sales, HR and operational. With the help of connection in customers in their application. This journal here discusses about the ERP by Daneva, M. (2004).

  • Few advantages and disadvantages of ERP software

Advantages and disadvantages of ERP software have been discussed below:

AdvantagesDisadvantages
  • With the help of ERP, management of company information and data is very convenient. 
  • ERP software decreases all the chances of error duplication.
  • The best advantage of this software leads to removing all the barriers of communication in the company as it connects all the level management and customers. 
  • As per author Daneva( 2001), the management of time and resources can be managed with the application of this software more effectively.
  • This software is a little expensive as compare other software.
  • For using this software, the company has to have those people who have expertise in this software.
  • This software is rigid in some aspects. 
  • This software has to be linked with every hardware of the system which is a very difficult task.


Reasons for using ERP in the company

There are many reasons for using ERP software in our company. The main reasons for using ERP has given below with justification:

  • Management of resources: If we will use ERP software, all the assets which are fixed in our company will be maintained. This will also help in tracking all Materialized Bills which has been generated or past bills of the company.
  • Management of Inventory: The main reason for choosing ERP is for the management of inventory. As our company currently lacking in the management of inventory. As it will track all the numbers of the products and it will help us know which stock had been out and which stock is more in demand. 
  • Management of cost: No doubt this software is not pocket-friendly. But if we will see in the long run the rate of return will be higher than the losses which our company is currently bearing.
  • Satisfied customers: With the help of this software, the satisfaction level of customers will also increase. As they will be able to track their products and they will be provided with better services.
  • The rise in Production level: When our company will have more knowledge about the ingoing and outgoing of the product than our company will be able to produce more products as per customer requirement.  

This journal is explaining the major reasons for the selection of ERP by Parthasarathy & Sharma, (2016)

Top 10 ERP softwares and comparative analysis

                                                                                                                                                 Bizowie Cloud      Epicor                Global Shop Solutions   Netsuit


                                                                                                                                           Sage 100cl   Sage 300cloud     SYSPRO ERP      Aquilon


                                                                                                                                                                    Onramp Solutions ERP Infor CloudSuite Industrial (SyteLine



Other Software rather than SAP

If we talk about any other software rather than SAP which will be suitable for our company will Sage100cl ERP. It is that software which will manage all the activities which are required to perform the majority of the task in the company. It will help in eliminating many barriers which SAP program was not able to identify. The reasons why to choose Sage100cl ERP is given below:

  • Exclusion of cost: With the help this software, our will be able to save tons of IT cost. As it will be handling all the information and data in a precise manner.
  • Efficient technology: this software will help in saving the efficient time of our company which we can use in utilizing in development of new products and technologies.
  • Maintaining tracks and records: with the help of this software, maintaining records of data is a lot easier. With the easy availability of data, the process of decision making will be much more convenient for top level management.
  • Managing SCM: With this, the management of the supply chain of the assets and products can be organized in a more prominent way.
  • Cost effective: this software is more in the budget of the company as it is suiting the business plan of our company and covering all the major aspects which are related to inventory management.

Mechanism of Phishing

The Mechanism of phishing has been explained below:

  • Spare Phishing: this type of phishing mechanism revolves around a single person or an organization. In this phishing method, the person will try to attain all the information regarding the company so that after having all the details they can get all the information from their target. 
  • Whale phishing: This type of phishing mechanism revolves around the lower level management of the company. In this, they will share spam messages to their target in which they will ask for the confidential information regarding the company in a very genuine way. They trick their target by shoeing all the wrong information in an authenticated way.
  • Clone Phishing: Clone phishing is a type of phishing mechanism in which they will make a clone of website or message so that they can track their target and gather all the confidential information from their target. They attach unauthenticated links which automatically grab all the information of their target from their system.

This paper here is explaining the mechanism of phishing by Patel & Patel, (2012).

Precaution For Phishing:

There are many things which we can do to protect our company from a phishing trap, few of them are given below:

  • All unauthenticated links and software should be removed from the company database.
  • Antivirus should always have to be kept updated in the database of company software.
  • Alert emails and messages should have to be shared time to time for company data protection. 
  • The selection of a password should have to be with strong digits.

This journal is representation of the prevention methods from phishing by Gupta & Pieprzyk, (2011)

ERP software is much more updated than the SAP software as it will help in detecting all the malicious activities. As if this kind of activity happened the TUMI Company with the SAP software, it will not be able to handle the effect which has been created by the software. 

Conclusion

In the conclusion of the report, it has been analyzed that the majority of the company performance depends upon the selection of software which they are choosing for their day to day operations. BY choosing the right option for their organization, they will be able to manage all the functions like supply chain, inventory management, and their cost. the company has to understand that this type of investment process can save their long time investment. The company has to understand their structure and their requirements. With the understanding of all the information, the company will be able to get their desired rate of return and will be able to satisfy their customers.  

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